New mortgage rules offer relief, but might still push prices higher, brokers say

• Mortgage cap raised to $1.5M, easing access for buyers.
• Longer amortizations could fuel housing demand.
• Buyers may face increased competition for higher-priced homes.
• Broker Bryon Howard cautions new rules might drive property prices higher.

Quick recap: Finance Minister Chrystia Freeland revealed this week that the insured mortgage cap would increase to $1.5 million, along with expanded access to 30-year amortization periods. The changes, set to take effect on December 15, are intended to ease the homebuying process, especially in high-cost markets like Toronto and Vancouver.

What it means in market: According to Bryon Howard from EXP Realty in Calgary, Alberta, the new rules could immediately open doors for buyers. "We're going to see all kinds of buyers able to afford homes up to $1.5 million," Howard said in a phone interview. In many markets, that's just the price of a regular house, and now buyers can qualify for long-term mortgages on properties they may have previously been priced out of.

Howard anticipates the changes will take effect rapidly. "People are looking at homes today, putting in offers with conditions, and closing in 90 days," he said. With the new rules just 90 days away, those buyers could purchase a property for $1.2 or $1.4 million with as little as 5% down.

But there's a catch: As more buyers come into the market with these new terms, demand could rise and put upward pressure on prices, said Howard. "It’s a Catch-22," he said.

Bottom line: With Canada’s average home prices exceeding $1 million in major markets like Toronto and Vancouver, the old $1 million mortgage cap had long been seen as a barrier. While the updated rules are designed to keep up with inflation and rising property costs, experts like Howard remain cautiously optimistic. "It's a good initiative and we're happy to see it. But there is still a lot more to do,” he said.